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Poverty Reduction and Economic Growth: The Asian Experience

By Peter Warr, | February 1, 2001

If policies are to be designed so as to reduce absolute poverty most effectively, much remains to be understood about the causes of poverty and the conditions that lead to its reduction. For example, it is now well-established that the rate of economic growth is a significant determinant of the rate at which poverty declines over time. However, it seems likely that the effectiveness of overall growth as an engine of poverty reduction varies from one country to another, and may also vary from time to time. We wish to know not only whether economic growth is associated with poverty reduction, but also the degree to which the nature of the economic growth also matters. Assuming it does, we then wish to know which kinds of growth are most conducive to reducing poverty.

The present paper looks at three regions of Asia with these issues in mind. It studies the relationship between changes in the headcount measure of absolute poverty incidence and the rate of economic growth in South Asia (India); East Asia (Taipei,China); and four countries of Southeast Asia (Indonesia, Malaysia, Philippines, Thailand). The data cover the period from the 1960s to the 1990s. The above six economies were chosen for their wide geographical coverage and for the availability of data on aggregate poverty incidence covering a significant number of years in each case.

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Read More: Agriculture, Development, Economy, Governance, Poverty, Asia

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